US performance boosts Cadbury profits

Cadbury Schweppes, the world's biggest sweets company, today reported a 1% rise in 2004 profits, boosted by a strong performance in key markets including the US.

The company, whose products include Dairy Milk chocolate, Trident gum and Dr Pepper drinks, made underlying pre-tax profits of £933m, largely in line with analysts' forecasts of between £927m and £953m. Cadbury said its underlying 2004 sales had risen by 4%, with operating profit margins increasing by 0.5%.

"2004 was a good year for Cadbury Schweppes, with excellent progress in key markets, particularly the US," the chief executive, Todd Stitzer, said. "We successfully built sales momentum in beverages and confectionery while integrating Adams [the confectionery business acquired by Cadbury's in 2002] and implementing major cost reduction programmes."

Cadbury said its US fizzy drinks business had enjoyed a successful year, thanks to strong demand for drinks such as Dr Pepper and diet brands, although it warned that sustaining these "outstanding" growth rates would be challenging.

The group reported that 2004 had not been an easy year for its European drinks business, but said it was beginning to see the result of changes including an improved supply chain.

"While the external commercial environment remains competitive, we are confident that we have the strategy, brands and people to deliver within our goal ranges in 2005," Mr Stitzer said.

Cadbury - shares in which have risen on speculation that it could attract a takeover bid - said it intended to remain as an independent company.

"We believe we can grow as an independent company, and that's the intention of myself and the board," Ken Hanna, the chief financial officer, told CNBC TV. Mr Hanna said he was "absolutely not" interested in a deal with the French food group, Danone.

Cadbury employs more than 50,000 people around the world, with around 7,000 of those working at eight UK sites including its chocolate factory at Bournville, Birmingham.

In addition to the Dairy Milk range, its chocolate brands include Roses, Flake, Crunchie, Double Decker and Boost. New product ranges such as wafer-thin Cadbury Snaps and Flake Moments helped drive strong chocolate sales in the UK during the fourth quarter of the year.

Cadbury said its costcutting Fuel for Growth programme had saved around £75m during the year, bringing the total to £100m since it started in mid-2003. It expected "further significant savings" from the plan, which involves closing 20% of its 133 factories worldwide and reducing its workforce by 10%.